M/s. ROYAL CUSHION VINYL PRODUCTS LIMITED
Report on the Financial statements
We have audited the accompanying financial statements of M/s. ROYAL CUSHION VINYL PRODUCTS LIMITED ('the Company'), which comprise the balance sheet as at 31 March, 2024, the statement of profit and loss (including other comprehensive income), Statement of Changes in Equity and Statement of Cash Flows for the year then ended, notes to the financial statements, a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the financial statements").
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, including Indian Accounting Standards("Ind AS") specified u/s 133 of the Act, of the state of affairs of the Company as at 31 March, 2024 and its profit(financial performance including other comprehensive income, changes in equity) and its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion:
We conducted our audit of the financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Financial statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Material Uncertainty Related to Going Concern
We draw your attention to Note 43 of the financial statements, which indicates that the Company's net worth has got eroded as of March 31, 2024 and the Company's current liabilities exceeded its current assets. Our report is not modified in respect of this matter.
Emphasis of Matter
1) We draw your attention to amount written back of outstanding dues of Finquest Financial Solutions Private Limited ("FFSPL") of Rs.22860.44 lacs. Finquest Financial Solutions Private Limited ("FFSPL"), FFSPL had taken over the loans from SICOM & Saraswat Co-op bank. Pursuant to time to time deliberations and negotiations with FFSPL, the Company has finally negotiated with FFSPL to make a full and final payment of Rs.860 lacs ("Settlement Amount") towards settlement of all outstanding dues and accordingly, completed the full payment of the entire Settlement Amount during July 2023. Pursuant thereto, the Company has received the No Dues Certificate dated July 14, 2023 from FFSPL confirming no outstanding dues in the loan accounts of the Company with FFSPL. Accordingly, the said loan accounts stands settled in the books of the Company and outstanding balance amount lying in books, which is not payable has been written back in the books and current charges outstanding against above is nil and same is added in Exceptional items.
(Refer Note No 34.1 in the financial statements)
2) We Draw your attention to amount written back of outstanding Provisions for Custom Duty including interest of Rs.5683.95 lacs: Under the Duty Exemption Scheme of Advance License (as well as similar other license scheme) pursuant to Import & Export Policy of Government of India, duty free imports of raw materials were permitted, and they are required to be used in manufacturing of goods for export and export of goods has to be effected within the time allowed in terms of such scheme. In the past ( Prior to year 2000), the Company had availed benefit of such licenses from time to time and it had also fulfilled its export obligations as per the conditions of such scheme in many of the licenses but in some cases such exports were not done . The said matter relates back to the period of more than 25 years and as such, the management of the company, based on an expert opinion ,
evaluated its specific obligations which may still subsists, if any. Based on the comprehensive evaluation and expert opinion, the provision made in earlier years has been written back and same is added in Exceptional items.
(Refer Note No 34.2 in the financial statements)
3) We Draw your attention to unclaimed Liabilities/Balances written back of Rs. 329.44 lacs represents balances of various parties, which are no longer payable, have been written back. The same is added in Exceptional items.
(Refer Note No 34.3 in the financial statements)
4) We Draw your attention that during the year under review, the Company has done revaluation of it's Land as per the provisions of IND AS. The revalued figure is Rs.3569.00 lacs and after reducing the book value, revaluation reserve created is Rs.3522.45 lacs. This value is credited in the Statement of Profit & Loss under the heading Other Comprehensive Income
(Refer Note No 3 in the financial statements)
5) We Draw your attention that the Company has completed preferential issue of i) 66,21,250 equity shares of the Company having face value of Rs.10/- each, to members of the Promoters and Promoter Group at an issue price of Rs.40/- per equity share including premium of Rs.30/- per equity share. Such preferential issue is against the conversion of their outstanding balance of unsecured loans given by promoters and promoters group to the Company ii) 1,79,00,000 equity shares of the Company having face value of Rs.10/- each at par, to private investors (non- Promoters) on preferential basis . Further, these shareholders will have voting rights at par with existing shareholders. The above shares are allotted in the meeting of Board of Directors on the Company on 17.11.2023. The Company has also received Trading approval from BSE Ltd for these preferential shares vide letter dated 26.01.2024 from BSE Ltd.
(Refer No te No 12.2 in the financial statements)
6) We Draw your attention that the company has sold its land parcels comprising of Factory Land. Profit on sale of assets Rs. Rs.1065.21 lacs is grouped under other income.
(Refer Note No 23 in the financial statements)Our conclusion on the financial statements is not modified in respect of the matters described in paragraph 1 to 6 above Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
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Key Audit Report
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How was the matter addressed in our audit
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Revenue Recognition
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Our audit procedures, among other things, included the
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Revenue is recognized upon transfer of control of promised goods to customers in an amount that
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following:
• Considered the appropriateness of the Company's
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reflects the consideration which the Company expects
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accounting policies regarding revenue recognition
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to receive in exchange for those goods. Revenue is
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• Testing controls, automated and manual, around
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measured based on transaction price, which is the
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dispatches/deliveries/shipments inventory
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consideration, adjusted for rebates, discounts and
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reconciliations and process of confirmation of
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incentives as also estimated sales returns.
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receivable balances, testing for cut-offs and
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Revenue is one of the key profit drivers and therefore,
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analytical review procedures.
• Assessed the disclosures in accordance with the
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accounting of revenue is considered as a key audit
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requirements of Ind AS 115 on "Revenue from
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matter.
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Contracts with Customers".
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[Refer Note 2(a) to the financial statements]
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Our audit procedures, among other things, included the following.
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Valuation of inventories
The Company has complex product manufacturing process and thus, the overhead absorption over each
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Evaluated the appropriateness of the basis applied to arrive at the overhead absorption rate;
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•
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Examined the workings of the absorption of over heads to arrive at the cost of inventories.
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process is quite complex and more particularly, to
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have the basis of absorption. The Company has
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worked out the overhead absorption cost rate based
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•
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Our audit methodology involves process adopted to
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on the consumption of electricity and other utility
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ascertain and evaluate the methods used are
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resources of each process and apply the same for all
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reasonable and absorbs overheads in an appropriate
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other overheads.
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•
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& logical manner.
Assessed the disclosures in accordance with the
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Due to significance of arriving at the overhead absorption rate for the valuation of inventories, it is
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requirements of Ind AS 2 on "Inventories".
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considered to be a key audit matter.
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Our audit procedures, among other things, included the following.
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[Refer Note 2(d) to the financial statements]
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Revaluation of Land
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•
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Evaluated the appropriateness of the basis applied.
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The Company has done revaluation of it's Land as per
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•
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Examined the workings and reviewed the valuation
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the provisions of IND AS.
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report from independent valuer.
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The revalued figure is Rs. 3569.00 lacs and after reducing the book value, revaluation reserve created
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•
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Our audit methodology involves process adopted to
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is Rs. 3522.45 lacs. This value is credited in the
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evaluate the methods used are reasonable in an
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Statement of Profit & Loss under the heading Other
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appropriate & logical manner.
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Comprehensive Income
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•
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Assessed the disclosures in accordance with the requirements of Ind AS 16 on "Property Plant and
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Due to the significance of the amounts involved, it is considered to be a key audit matter.
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Equipment".
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[Refer Note 3 to the financial statements]
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Information Other than the Financial statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board's Report including annexure to Board's Report and Shareholder's Information, but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with the Governance for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to preparation and presentation of these Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows statement, statement of changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (IND AS) specified prescribed under Section 133 of the Act, (read with Rule 7 of the Companies Indian Accounting Standards) Rules, 2015, as amended.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error which have been used for the purpose of preparation of the Financial Statements by the Directors of the Company, as aforesaid.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements. Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance.
Auditor's Responsibilities for the Audit of the Financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SA's will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Other Matter
The financial statements of the Company for the year ended 31 March 2023 were audited by the predecessor auditor, Bipin & Co, who have expressed an unmodified opinion on those financial statements vide their audit report dated 29th May , 2023.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order, 2020, issued by the Central Government of India in term of subsection (11) of section 143 of the Companies Act, 2013, we give in the Annexure "A" a statement on the matters specified in the paragraphs 3 and 4 of the Order, to the extent applicable.
1. As required by section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) The balance sheet, the statement of profit and loss and the statement of cash flow dealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
(e) On the basis of the written representations received from the directors as on 31 March, 2024 taken on record by the Board of Directors, none of the directors are disqualified as on 31 March, 2024 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting.
(g) With respect to other matter to be included in the Auditor's Report in accordance with the requirement of section 197(16) of the Act, as amended in our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act.
(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigation on its financial position in financial statements—Refer Note 36 to the financial statements.
ii. The Company did not have any long-term contract including derivative contract for which there are any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
iv. (a) The Management has represented that, to the best of it's knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(b)The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity
("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
(v) The Board of Directors of the Company have not proposed any dividend for the year and therefore provisions of rule 11(f) are not applicable.
(vi) As stated in note 50 to the financial statements and based on our examination which included test checks, except for instance mentioned below, the Company, in respect of financial year commencing on 1 April 2023, has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with, other than the consequential impact of the exception given below:
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Nature of exception noted
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Details of Exception
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Instances of accounting software for maintaining books of
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The audit trail feature was not enabled at the
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account for which the feature of recording audit trail (edit
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database level for accounting software to log any
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log) facility was not operated throughout the year for all
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direct data changes, used for maintenance of all
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relevant transactions recorded in the software.
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accounting records by the Company.
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2 As required by the Companies (Auditor's Report) Order, 2020 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.
For MANEK & ASSOCIATES Chartered Accountants Firm's registration number: 0126679W
(SHAILESH MANEK)
Mumbai Partner
Dated: 29th May,2024 Membership number.034925
UDIN :- 24034925BKGEGU1320
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